Evangelina Newman v Commonwealth Bank of Australia

Evangelina Newman (the applicant) brought proceedings against the Commonwealth Bank of Australia (the respondent) in the Supreme Court of New South Wales, Court of Appeal. The dispute concerned the respondent's alleged breach of duty of care owed to the applicant in relation to a loan facility.

The primary legal issue before the Court of Appeal was whether the respondent bank owed a duty of care to the applicant, a guarantor, to advise her on the financial viability of the proposed venture for which the loan was being sought, and whether the bank breached that duty. The court was required to consider the nature of the relationship between a bank and a guarantor, and the extent of any obligations arising from that relationship.

The Court of Appeal held that a bank does not owe a duty of care to a guarantor to advise on the financial viability of the borrower's venture. The court reasoned that the relationship between a bank and a guarantor is primarily contractual, and the guarantor's undertaking is to repay the debt if the borrower defaults. While a bank has a duty to act in good faith and not mislead a guarantor, this does not extend to providing financial advice or conducting due diligence on behalf of the guarantor. The court distinguished this situation from cases where a bank might owe a duty of care to a customer in providing financial advice.

The appeal was dismissed.